As we have discussed in other threads with regard to possible changes that can get the flyers back to AC, the problem with Air Canada is more than just upgrade policy and award redemption issues. Someone just talked about what if AC hasn't cut back on catering. Service level needs to improve. They need to invest in their products, which they haven't for a very long time in the airline industry. While the time is difficult, major airlines have chosen to innovate their products so that they will be ready when the economy recovers (e.g. ANA, Japan Airlines, CX and SQ). It is unfortunate that when we talk about Aeroplan these days, we are thinking of which benefit is the next to be eliminated or how AC is going to cut their cost at the expense of flyers. This is the wrong way to go as flyers would respond by not flying AC. So when trying to save a small fish by cutting benefits that anger the best customers, they miss the biggy. So is there anything that AC can do to recover some these damages? Granted it's going to be very difficult but Air Canada has to realize it's in their interests to pay attention to what we have to say. All these years since CP disappeared, AC has adopted an attitude: "We make the rules, take it or leave it." But this is not going to work anymore, the flyers are angry and if nothing is done about it, the flyers are going to retaliate forcefully.

Now, here are some suggestions as to how Aeroplan can reward its best customers:

UNUSED UPGRADE BONUS

One of the problem with Super Elites and some Elites is that they often have a surplus of upgrade certificates. For people who fly mostly full J, these papers are about useless. If Air Canada can establish a policy that would accept unused certificates for miles at the end of year, then it would be an extra incentive for flyers to fly Air Canada. Most importantly, I think high-yield passengers would then be more inclined to fly full J whenever possible because they know the fewer certificates they use, the more miles they get. AA and UA both have such policy as an unpublished benefit. With AA, their program is the most generous - for every 10,000 Q miles flown, you get 4 X 500 Miles upgrades which worth also 10,000 bonus miles if unused.

Aeroplan is not very competitive when it comes to earning miles for its Elite members. It only becomes better after you reach 100K threshold. For Elite flyers, they would earn less miles than their counterparts in other programs such as AA or UA. The situation is even more pathetic for people flying less than 50K a year with AC, you earn about 30% bonus of your total miles flown at 50K whereas similar programs with most major U.S. airlines earn 100% bonus of total miles flown. Someone who flies 40K would earn slightly more than 10% bonus of its total flown miles whereas others give you 100% bonus. Of course, that didn't even take into account the difference for exchaning upgrades against miles. In summary, if Air Canada wants to retain its loyal customers, it needs to increase the mile earning power of its most important flyers. Canadian flyers have many choices and they will vote with their budget.

Here is a comparison between the life of an AA Platinum VS. AC Elite:

At 40,000 Q miles

AA Platinum earns 40,000 base miles + 40,000 elite bonus + 40,000 unused upgrade bonus = 120,000 miles

AC Elite earns 40,000 base miles + 5,000 treshold level 1 bonus = 45,000 miles

At 80,000 Q miles

AA Platinum earns 80K X 3 = 240,000 miles

AC Elite earns 80,000 base miles + 45,000 treshold bonuses + ( one reward ticket worth 25,000 miles ) = 125,000 miles or 150,000 miles considering the value of the free ticket

At 120,000 Q miles

AA EXP earns 120K X 3 = 360,000 miles

AC SE earns 120K base miles + 85K treshold bonus + 30K bonus (at 10K) + free reward ticket = 235,000 miles or 260,000 miles with the reward ticket.

The conclusion is at levels below 50K which more than 99% of Aeroplan members belong to, the earning power is about a pathetic 35% of a U.S. program. Of course that didn't take into account the fact AC only offers 50% of mileage for domestic disccounted economy flights. At higher levels, the difference is smaller but nonetheless quite far behind still (e.g. 100,000 miles of difference, wow!) AC should seriously consider recuperating upgrade certificates for miles if they intend to spin off Aeroplan and the certificates would actually have a value to them. It would be an extra incentive for its best customers to remain with AC and especially those J pax unable to use those certificates to remain loyal. Remember, CP Plus used to do this just like AA, why can't AC? It will encourage people to buy J fare whenever possible not the other way around.


CLASS OF SERVICE BONUS

It was there until January 1st of this year, for people flying in C class. Taking this away is another reason for Elites and Super Elites to be indifferent about AC. By lowering itself to the level of its competitors would not give your loyal customers any incentive to choose you over your competitors. For people who buy C fares, it's unfair. Why can't they get bonus when they are paying business class fare? Another reason to fly someone else other than AC b/c paid discounted business fare earns class of service bonus on other airlines' program. It seemed AC only thinks about cutting costs but hasn't realized some things can't be cut or why not just shut down the airline completely, then there will be no cost at all? For flyers using certificates to upgrade to C class, they now earn about 20% less miles than before. This decrease is big although many don't seem to realize it. I for one is quite disturbed by this. Already earning power with AC is weak, now they have just cut it by another 20%, forget about it, UA or AA looks much more attractive now than ever.

Eliminate the fees associated with changing/cancelling awards for Elites and Super Elites

Impose fines for those who fail to show up and didn't bother to notify in advance but don't try to squeeze cash out of your best customers when you risk to get on their nerves and they will respond with irrational behaviors (swear not to fly you again). This is annoying and punishing for your best customers.


I trust these suggestions are more than reasonable as several of them were in fact old policies that you have abandonned in the name of cost cutting. But cost cutting is not the way out of this economic downturn if the bad will you create simply destroyed the customer loyalty of your most important customers. To fellow FTers, please feel free to add your comments and any other suggestions. We'll talk to AC on Feb. 7th but they will have chance to have an idea what to expect.

If you read the threads in the AA forum, apparently unused upgardes can now be returned for only 500 miles credit each. This brings their policy in line with US Airways. Better off to use them - after all, that's the whole point of earning upgrades

But you're right about earning more bonus miles with the US carriers. We get 100% mile bonus on all fares. None of this 35% crap.

My your mind is working at full speed these days, Guava. Good show.

I have just one word in response to your topic:

R-E-S-P-E-C-T!!!!!!!!!!!!!

A few general comments on your post...

In case you hadn't read it: AA is reducing the "refund" for unused 500s, I believe to a mere 2,500 miles from 10K. This provision was originally introduced for non-NAmerican elites who seldom flew AA domestically and thus could not make use of the upgrades in this fashion. The idea was that they could be converted into international upgrades via the miles upgrading awards. As with everything, this intent got a bit twisted and has resulted in AA being deluged with requests to convert these credits to miles. Thus the severe reduction in this conversion rate.

CP did this only as an unwritten perk for just ExecPlats. Few knew about it, and thus few did it. When too many upgrade sticker packs starting coming back, they cut the members off. And from the evidence of CP's abysmal sales rate on J paid tickets, this was not encouraging their elites to buy J. Afterall, these were extremely valuable when they could be used from any fare. Imagine how many were sitting in the front cabin on $250 return Q fares between YYZ and YVR, using their stickers! You can see how USAir is in exactly this same revenue spiral, filling its front cabin with anyfare upgrades and losing hundreds of dollars on each passenger.

Something you overlooked in your analysis of the bonus points offered: On AA domestic, one is earning 100% mileage on any coach or upgraded fare, so getting 200% mileage credit. On AC domestic, one is earning either 50% or 75% [one of the better moves by AC], so doing a lot more flying to reach the 50K threshold where the real bonuses start. So AC's domestic fliers are really treated badly in this regard. AC discriminates in favour of international travellers in a very, very big way.

Which is why someone can earn SE for about $5K by flying just five returns to Australia or the Far East -- lower fares on UA, of course -- and come out with almost 200K in miles plus that 70K threshold ticket. Someone else can buy a single return J-ticket between YHZ and YVR for about the same money and come out with a paltry 7.5K!

Kinda makes you wonder...

One last note, there is no class-of-service credit on upgraded flights on UA or AA, or most US carriers. So AC is just bringing this into line with other programs.

How do you explain Continental's good financial performance? They jam pack more elite flyers in their F cabins than US or any other airline for that matter.

Al,

If you finish reading that thread in AA forum, you will notice it was just a rumor, not true. AA still collects each 500 mile upgrade for 2,500 miles.

See this thread:

http://www.flyertalk.com/forum/Forum71/HTML/007635.html

Edit to add link to relevant thread.

[This message has been edited by Guava (edited 02-05-2002).]

Thank you for your comments, Shareholder.

Re: Something you overlooked in your analysis of the bonus points offered: On AA domestic, one is earning 100% mileage on any coach or upgraded fare, so getting 200% mileage credit. On AC domestic, one is earning either 50% or 75% [one of the better moves by AC], so doing a lot more flying to reach the 50K threshold where the real bonuses start

I did mention this: "Of course that didn't take into account the fact AC only offers 50% of mileage for domestic disccounted economy flights." I guess I didn't emphasize on that very much party because one of the assumptions I used was we were talking about Elite flyers so they usually earn 100% mileage. But I guess that's not always true these days seeing so many E and SE flying on back cabin.

I still think AC should not cut the C class bonus b/c it is still available for sale on certain routes whereas the U.S. airlines do offer class of service bonus even on their discounted business class fare. AC is brining this in line with their U.S. competitors for people on upgraded flights but that's just like saying we can do just as bad as our competitors. In this cut-throat industry, you want to have an edge, any competitive edge you can get, you should try to maintain it. AC's mentality these days is to look around and see what they can they cut so that they can be as bad or worse than their competitors. If they are just as bad, they call it: "Our changes are competitive with other U.S. airlines." If they do worse: "Economic downturn forces us to cut, we don't have another choice." Excuses after excuses...look at CO, they didn't cut most of their service and appearantly, their perserverance paid off big time - instead of saving 7 millions on catering, they gain 100 millions of revenue. This is a good lesson for AC.

Anyfare upgrade is not a problem to a well managed airline. Almost all major U.S. airlines allow any fare upgrade domestically, some of them internationally as well and if you look at the big players, that doesn't seem to bother them at all. U.S. Airways is a bad example, the airline is struggling not because of its anyfare upgrade, its problem is much more complicate than that. By the same token, one can fly an AA e-saver coast to coast for $200 USD and fly in first/business class using upgrades, that's so much better than paying $900CAD to fly YYZ-YVR on AC.

FA: CO went through Chapter 11, so has one of the lowest debt and operating cost structures in the industry, meaning it can make money on less revenue. I also has a smaller route system and tighter set of hubs at EWR and HOU, as well as CLE. And US lost US$2 billion last year and is now flailing around in the low fare, fill the cabin at any cost scenario exactly as CP was four years ago. Proportionately, this is an even bigger loss than the US$2.1 UA lost last year.

Sorry about missing that sentence, Guava.

Indeed, I didn't know about this when I was an ExPlat. On the other hand, they let me keep using them after they'd expired, and at one point where I'd run out one of the concierges handed me a stack of upgrades that somebody else had given her, since they wouldn't be able to use them.

islandcub, � la recherche du temps perdu

US isn't always cheap. Ask the folks who live in CLT, PIT, or PHL!

There are two main reasons why US is having revenue problems:

1) Continued restrictions on DCA routes

2) Greedy pilots union preventing the airline from acquiring more RJs and belonging to an alliance.

Upgrades have nothing to do with it.